Steve Chen, a third-year electrical engineering student, is really into gaming. He and all of his friends like online multi-player games, but are annoyed by delays caused by slow internet connections. Sometimes they link their own computers into local networks and play, but it’s hard to find a place to play and their laptops are not the best machines for gaming. On his work term in Abu Dhabi, Steve noticed that gaming halls are popular. High-level networked game machines are located in malls, and people rent the machines by the hour for playing games either with each other or over a very fast internet connection. Steve expects to be on campus for the next five years and sees an opportunity in setting up a similar business at the mall next to his university. The first cost for equipment, furniture, and software is expected to be P 70,723. Students will be able to rent time on the computers by the hour, and Steve will be able to augment this income with some auxiliary services.
use four (4) decimal places
1. Steve Chen, a third-year electrical engineering student, is really into gaming. He and all of his friends like online multi-player games, but are annoyed by delays caused by slow internet connections. Sometimes they link their own computers into local networks and play, but it’s hard to find a place to play and their laptops are not the best machines for gaming. On his work term in Abu Dhabi, Steve noticed that gaming halls are popular. High-level networked game machines are located in malls, and people rent the machines by the hour for playing games either with each other or over a very fast internet connection. Steve expects to be on campus for the next five years and sees an opportunity in setting up a similar business at the mall next to his university.
The first cost for equipment, furniture, and software is expected to be P 70,723.
Students will be able to rent time on the computers by the hour, and Steve will be able to augment this income with some auxiliary services.
Net annual cash flow(revenue), after paying for labour, supplies, and other costs, is expected to be P 32,284 a year for five years.
When Steve finishes his graduate program in 6 years, he plans to close the business. The five-year-old equipment and furniture are expected to have zero value. If investors in this type of service enterprise demand a return of 20 percent per year, compute for the net sales (revenue - total cost) using annual worth method.
2. Use another method to verify if the investment is justified or not.
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